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THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
PRUCO LIFE INSURANCE COMPANY
as of March 4, 2005
Quaker Fabric Corporation of Fall River
941 Grinnell Street
Fall River, Massachusetts 02721
Attention: Mr. Paul J. Kelly
Re: Waiver to Note
Agreements
Ladies and Gentlemen:
Reference is hereby made to the (i) that certain Note Purchase
Agreement, dated as of October 10, 1997 (as
amended, restated, supplemented or
otherwise modified from time to time, the
"1997 Note Agreement") and (ii) that
certain Note Agreement and Private Shelf
Facility, dated as of February 14, 2002
(as amended, restated, supplemented or
otherwise modified from time to time, the
"2002 Note Agreement", and together with
the 1997 Note Agreement, the "Note
Agreements"), each by and among Quaker
Fabric Corporation of Fall River (the
"Company"), Pruco Life Insurance Company
("Pruco") and The Prudential Insurance
Company of America ("Prudential"; and
together with Pruco collectively, the
"Noteholders"). All capitalized terms used
herein without definition that are
defined in the Note Agreements shall have
the same meanings herein as therein.
All accounting terms used herein and not
otherwise defined shall be used in
accordance with generally accepted
accounting principles.
The Company has informed the Noteholders that the Fixed Charge
Ratio
for the prior four (4) consecutive fiscal
quarters ending on January 1, 2005 was
less than 1.75 to 1.00. Each of the
Borrowers and the Parent acknowledges and
agrees that such performance result
constitutes an Event of Default (the
"Specified Default") under paragraph 6D of
each Note Agreement.
The Company has now requested, and by their signature below the
Noteholders agree to grant, a limited
waiver in respect of the Specified Default
subject to the terms and conditions
provided herein. In consideration of the
Noteholders' agreement to waive the
Specified Default through the period ending
March 13, 2005 (the "Limited Waiver
Period"), the Company agrees that:
1. an Event of Default will exist on March 14, 2005 and that
at such time the Noteholders will have all of their rights and
remedies
as a result of the existence of an Event of Default
